Going International!

So you’ve expanded your business on a national scale and are satisfied of the success you have had. But with the current recession, you are thinking it’s time to expand your business internationally. Asia sounds good. China is forecasted to still grow at around 7%. However, this is definitely, not a walk in the park. There are several factors to consider. One thing that is important is to understand the business culture. A vacation trip to your targeted country doesn’t qualify you as an expert in the country’s business culture. After all, haggling to get the price down for those great leather shoes in the local shop doesn’t mean you are an expert in their business negotiation techniques. Different cultures have different beliefs and values that influence the way they do business.

For instance, Chinese, Japanese or Korean business people will hand their business cards with both hands as a sign of respect and sometimes with a slight bowing of the head. You will need to receive their business cards with both hands as well. Respect and saving face is very important in this culture. Whereas, for Europeans, especially Germans, it is important to include their title such as Dr., then their last name when addressing them. I guess it has something to do with their monarchial heritage. Americans are used to first name basis, in Europe, they use their last names, even when they answer the phone.

Business language is also important. I remember a Chinese colleague who was assigned to head up our Japanese sales office. The company paid for him to learn how to speak Japanese. But he told me that what he learned was useless for the business world. He learned how to talk with the grocery attendant and his son’s teacher but wasn’t able to use that when speaking with customers. He eventually learned though, after several years in the business.

Understanding the business culture and language are only the tip of the iceberg. It is important to find out what sort of government regulations they have for your industry and their importation laws and duties as these may easily eat up your profit margins.

Most governments however, welcome foreign investments and have set-up government agencies to assist investors. It is important to contact them first even before visiting the country to get as much information as you can. It could save you a trip, or help you plan for the places and persons to meet and who you would want to be on your team when you visit. If the country you’re visiting doesn’t speak English, make sure that you hire a local interpreter who could also act as your "tour guide".

A key ingredient is market research. You’ll need to understand the competitive landscape and how to market your products in that country. For instance, the Japanese market is dominated by the Keiretsu, which is a strong alliance of companies with interdependent businesses and common shareholders. Coupled with Japanese patriotism for Japanese products, most foreign companies have failed to capture the Japanese market. Successful penetration of the Japanese market was usually done through Japanese joint ventures or acquisitions.

Lastly, hire a great leader who understands your corporate culture and values and has worked in the foreign environment so that he/she can adapt your culture and values to the foreign culture in a professional business setting. Having this type of person will make it so much easier and faster for your company to reap the benefits of your geographic growth initiatives.